Filing Bankruptcy- You Must Know the Value of Your House
The purpose of this blog is to give you a rough idea about why you must know the value of your house before you even think about filing bankruptcy in Georgia. Under Georgia Law, a single person can exempt a maximum of $10,600 of equity in their house when they are filing either Chapter 13 or Chapter 7 (see GA Code 44-13-100). For married couples filing bankruptcy in Georgia, the maximum exemption is $21,200.
Lets say a married couple has a home in Rome, GA worth $100,000. They owe $70,000. Their equity in the house is $30,000. If we subtract the the exemption amount of $21,200, we are left with $8,800. If this person were filing bankruptcy, I would recommend they file a Chapter 13 to protect their home. In a Chapter 13, the person will have to pay back $8,800 to the unsecured creditors to protect their home in Rome. In this situation, if the couple owes $100,000 in credit card debt, they will have to pay back only $8,800 assuming they pass the means test and their income and budget justify a composition chapter 13 plan.
In contrast, if they filed a Chapter 7, the trustee may sell the house and use the proceeds that are not exempt to pay creditors. Could a person in this type of situation roll the dice and file Chapter 7 ? Some Georgia bankruptcy lawyers roll the dice…….I don’t. Some Georgia bankruptcy attorneys will argue that the cost to the Chapter 7 trustee in marketing the property and closing the deal will exceed $8,800 in transaction costs. It might. Why take a chance with your house when filing bankruptcy?
A good place to start when determining the value of your home is your tax bill. Somewhere on your property tax bill, it will state “estimated fair market value.” You can check your county tax assessment online at www.gaassessors.com. Another way to determine the value is to call a Georgia realtor and ask them to give you an estimate on how much you should ask for your house if you were going to sell it. The best way to determine the value is to get a certified professional appraisal.
Remember, there are exceptions to exceptions. Don’t read this blog as legal advice. If you want legal advice, you should call me at 888-832-8249 for your free consultation so we can see how the law applies to your situation.